The executive of the European Union offers a mechanism for blocking transactions in the event of a significant increase in the price of gas, but at such a price level and with such safeguards that this device may divide States members.
by Virginie Malingre (Brussels, European office)
Definitely, the European Commission does not want to hear about everything that, in one way or another, would approach a cap in the price of gas. Under pressure from the member states which are concerned about the economic and social consequences of the outbreak of the courses, it certainly presented, Tuesday, November 22, a “market correction mechanism” whose philosophy is precisely to prevent this energy from Excessively fly. But it has made this device used in extreme situations. “For example, if a pipeline is destroyed on the night of Saturday and on Monday morning, the markets get carried away,” explains a European diplomat.
“This mechanism is supposed to avoid flambés of gas prices comparable to that of last August”, hammers the community executive, but not to lower prices sustainably. In reality, even if the scenario of this summer was to be repeated, the way in which the “correction mechanism” was calibrated would not allow, as it stands, that it is activated. As a European official says, he was designed as an instrument of “deterrence” which, “in an ideal situation, will never be activated”.
The Commission proposes that, as of 1 er 2023 and for one year, transactions on the European gas market are prohibited if the contract price (for delivery in a month), Which is negotiated on the Rotterdam TTF scholarship and is used as a reference on the old continent, exceeds 275 euros per megawatt hour (MWH) for two weeks. Today, it is less than 110 euros and, in a year, the market values it around 125 euros.
Germany and the Netherlands prevail
This circuit breaker, on the model of what exists on the equity markets, will only be triggered if another condition is fulfilled: the price of the TTF to one month must have exceeded at least 58 euros, And this for ten consecutive days, that of the world gas market. This involves ensuring that suppliers of liquefied natural gas are encouraged to sell in Europe even if their income should be temporarily capped there.
The majority of member states, supporters of a ceiling on the price of gas, militated for a ceiling between 150 and 180 euros per MWh. Germany, the Netherlands, Denmark and Hungary, on the other hand, opposed to this idea, wanted it to be higher so as not to compromise the security of their supply. This second camp therefore won.
You have 47.86% of this article to read. The continuation is reserved for subscribers.